JAKARTA, Sept 5 (Reuters) - Indonesia will raise import
taxes on more than 1,000 goods ranging from cosmetics to cars,
as part of measures aimed at cutting imports and supporting a
weak rupiah, the finance minister said on Wednesday.

The import tax will be raised to up to 10 percent on 1,147
mostly consumer goods, from an existing 2.5 percent to 7.5
percent, effective next week, Finance Minister Sri Mulyani
Indrawati told a news briefing.

"We want to be alert, but we also want to be selective.
These are unusual times, so we are carrying out measures that we
wouldn't do during normal times," Indrawati said.

The rupiah dropped to its weakest level since the
1998 Asian financial crisis this week, closing at 14,930 per
dollar on Wednesday. Stocks tumbled the most in nearly two years
and bond prices also fell.

The battered currency has been one of emerging Asia's worst
performers as investors dump assets as U.S. rates rise and amid
fear of contagion from crises in Argentina and Turkey.

ADVERTISEMENT

Tariffs will be kept at 2.5 percent for raw materials used
by the manufacturing industry because of the important role in
domestic production, Indrawati said.

Consumer goods such as ceramics, audio speakers and swimwear
will have a 7.5 percent import tax applied. Products that can be
made domestically ranging from soap and shampoo to kitchen
appliances will be taxed at 10 percent.

Luxury cars will also be taxed at 10 percent, while Industry
Minister Airlangga Hartarto said the import of cars with engine
capacity of 3,000 cc and above will be stopped.

"This is a good chance for local producers to penetrate our
own domestic market that is usually filled with imported goods,"
Indrawati said.

Trade Minister Enggartiasto Lukita said the higher taxes did
not breach free trade rules set by the World Trade Organisation
because importers can offset the tariffs on their tax
liabilities.

Government data showed goods covered by the taxes were worth
$5 billion in the first eight months of this year and $6.6
billion throughout 2017.

ADVERTISEMENT

The government will also relax rules on coal, palm oil and
rattan exports, Lukita said, without providing details.

It is unclear whether importers would pass on the higher
tariffs to consumers, though Lukita predicted the impact on
inflation would be minimal.

Some manufacturers relying on imported raw materials are
already feeling the impact from the rupiah's slump.

Unilever Indonesia director Sancoyo Antarikso said
his company had adjusted some prices in August and was reviewing
costs to preserve profitability, growth and support brands.